It’s the first of the month, which means PenFed Credit Union (PenFed) will probably have raised its Money Market Certificate (MMC) rates. While several of the new APYs are competitive, none of them are rate leaders, as internet banks continue to be the front-runners in the CD rates race. Ever the optimist, I look forward to hot MMC deals at PenFed – hopefully in the near future.

APY

MIN

MAX

INSTITUTION

PRODUCT

DETAILS

2.73%

$1k

-

PenFed Credit Union

7 Year Money Market Certificate

2.68%

$1k

-

PenFed Credit Union

5 Year Money Market Certificate

2.43%

$1k

-

PenFed Credit Union

4 Year Money Market Certificate

2.38%

$1k

-

PenFed Credit Union

3 Year Money Market Certificate

2.33%

$1k

-

PenFed Credit Union

2 Year Money Market Certificate

2.22%

$1k

-

PenFed Credit Union

18 Month Money Market Certificate

2.12%

$1k

-

PenFed Credit Union

15 Month Money Market Certificate

2.07%

$1k

-

PenFed Credit Union

12 Month Money Market Certificate

1.65%

$1k

-

PenFed Credit Union

6 Month Money Market Certificate

Rates as of March 18, 2018.

The minimum opening deposit is $1k, with no stated balance cap. While PenFed calls these Money Market Certificates, they are essentially CDs. All of the above terms, with the exception of the 6-, 15- and 18-months, are available as IRAs (Traditional, Roth, and CESA) but with APYs 5 bps lower.

The MMC yields have increased from between 20 to 35 bps. While PenFed’s long-term rates continue to rise, 5- and 7-year rates are still 32 and 27 bps away, respectively, from 3%. I’m afraid we’ll have to keep waiting for the 3% CDs that we saw at PenFed in 2013 and 2014.

The following table compares PenFed’s MMC February and March APYs. As you can see, the rates seem to have increased proportionally.

In 2016, PenFed’s Early Withdrawal Penalty (EWP) changed and now reads as follows:

1) Six-month Money Market Certificates.

a) If redeemed within 90 days of the issue date or any renewal date, all dividends will be forfeited.

b) If redeemed thereafter, but prior to the maturity date, dividends for 90 days will be forfeited.

2) Certificates Having a Term Greater Than Six Months.

a) If redeemed within the first year, all dividends will be forfeited.

b) If redeemed thereafter, but prior to the maturity date, the early withdrawal penalty will equal 30% of what would have been earned if the certificate had been held to maturity, not to exceed total dividends earned.

As you can see, the EWP is harsh. For a 5-year term, 30% of total dividends is 18 months’ interest.

On the positive side, PenFed continues to allow penalty-free partial withdrawals of IRA CDs for members over the age of 59 1/2. The following is an excerpt from the IRA CD disclosure:

Partial withdrawals for members over the age 59 1/2 (including Required Minimum Distributions) and qualified distributions regardless of age (including Disability) may be processed from IRA certificates without incurring an early redemption penalty.

This may be one reason PenFed now keeps its IRA CD rates 5 bps lower than its standard CDs.

Thanks to DA reader, marcal, for his Forum post about these rate increases.

Availability

Headquartered in Alexandria, Virginia, Pentagon Federal Credit Union offers membership to virtually all U.S. residents. PenFed’s online application lists the various ways in which individuals can qualify for membership.

If you meet any of the following requirements, you are eligible to join PenFed:

1. I am active/retired United States Military & Uniformed Services.

2. I am an employee of a qualifying organization.

3. I belong to the following association or organization.

4. I am an employee of the United State government.

5. I am a relative or housemate of someone who is eligible.

6. I live or work at an eligible location.

7. Other

Selecting Option #7, "Other," provides information about joining PenFed through membership in either Voices for America’s Troops ($17, one-time only dues) or the National Military Family Association ($17, one-time only dues). Joining either of these associations and PenFed can be done simultaneously using PenFed’s online application.

Need another way to join? No problem!
Members of the National Military Family Association and Voices for America's Troops are among those eligible for PenFed membership. We've made it easy for you to join one of these associations, which makes you eligible to join PenFed.

Joining PenFed and/or opening a Money Market Certificate can also be done in person at any of branches located in California, the District of Columbia (6), Florida, Georgia (6), Hawaii (3), Kentucky, Maryland (4), North Carolina, Nebraska, New Mexico (2), New York (2), Pennsylvania (4), Tennessee, Texas (8), Virginia (9), and Puerto Rico.

Credit Union Overview

PenFed Credit Union has an overall health grade of "A" at DepositAccounts.com, with a Texas ratio of 4.11% (excellent), based on September 30, 2017 data. In the past year, PenFed has increased its total deposits by $1.37 billion, an excellent annual growth rate of 8.44%. Please refer to our financial overview of PenFed Credit Union (NCUA Charter # 227) for more details.

Established in 1935, PenFed Credit Union is the third largest credit union in the nation, with more than 1,626,000 members and assets in excess of $22 billion.

How the Money Market Certificates Compare

When compared to the 212 similar length-of-term CDs tracked by DepositAccounts.com that are nationally available and require a minimum deposit of $10k or less, PenFed Credit Union's 12-month Money Market Certificate APY currently ranks second.

Interest Rate

CD Length of Term

Credit Union/Bank

2.10% APY

1-Year CD

Live Oak Bank

2.07% APY

12-Month Money Market Certificate

PenFed Credit Union

2.06% APY

12-Month Online CD

M.Y. Safra Bank

When compared to the 165 similar length-of-term CDs tracked by DepositAccounts.com that are nationally available and require a minimum deposit of $10k or less, PenFed Credit Union's 18-month Money Market Certificate APY currently ranks third.

Interest Rate

CD Length of Term

Credit Union/Bank

2.30% APY

18-Month Popular Direct CD

Popular Direct

2.25% APY

18-Month CD

Banesco USA

2.22% APY

18-Month Money Market Certificate

PenFed Credit Union

When compared to the 191 similar length-of-term CDs tracked by DepositAccounts.com that are nationally available and require a minimum deposit of $10k or less, PenFed Credit Union's 5-year Money Market Certificate APY currently ranks third.

Interest Rate

CD Length of Term

Credit Union/Bank

3.00% APY

60-Month Certificate

Connexus Credit Union

2.80% APY

60-Month CD

DollarSavingsDirect

2.68% APY

5-Year Money Market Certificate

PenFed Credit Union

The above rates are accurate as of 3/1/2018.

To search for the best CD rates, both nationwide and state specific, please refer to CD Rates Table page.

PenFed has tarnished ( if not ruined) its formerly sterling reputation over the last several years, which once it happens can be extremely difficult to reverse. One wonders what their response will be when later this year mega-quantities of 5 year 3% CD's begin maturing. Will they top the market and deliberately act to keep all those funds from evacuating, - or maintain their present status as no more than an also-ran among the industry leaders, with whatever consequences that entails. The current PenFed leadership does not show much promise in my own judgment.

They don't offer high rates but they took over Valor and are paying 3% on some of the CDs they inherited.

Maybe they are paying the price by offeringhigh rates in the part. They were offering 3% CDs when no one else was close. They even had a 5% CD around 2010 for 10 years that far exceeded anyone else. Maybe they were banking on rates going up which didn't happen.

PenFed is still a "niche" market for folks at or nearing the age of 59 1/2 with IRA CDs. As I've noted in other threads, a person with an IRA CD over the age of 59 1/2 may take a partial withdrawal from the IRA CD with no penalty (no EWP). A partial withdrawal is defined as one which still leaves $1000 in the CD. The balance after the partial withdrawal keeps clicking along at the stated rate.

Example: Joe has an IRA CD with PenFed in the amount of $100,000 for a term of 7 years at 2.22%. Joe wants to buy a new 7-yr IRA CD at 2.73%. Joe is 60 years of age. Joe sells $99,000 of his existing IRA CD with no EWP. Joe gets a check for $99,000. Joe immediately does an indirect rollover to the PenFed 7-yr IRA CD at 2.73%. One such indirect rollover per 365 days is allowed.

There is a sixty-day window to re-invest the proceeds in an indirect rollover. In the example I provided, an immediate re-investment is optimal.

Moving right along, Joe did that indirect rollover and bought the 7-year IRA CD at 2.73%. Well, it's a year later, and rates on the 7-year IRA CD have ballooned to 3.5%, Joe can cash in $98,000 of his $99,000 IRA CD (with no EWP) and do another indirect rollover to the higher rate.

Let's say someone has a 15-month certificate. If closed after 11 months, the EWP would be 11 months. But if closed after 13 months, the EWP should be ~4.5 months (30% of dividends earned if held to maturity). Does this make any sense? Did anyone confirm if it really works this way?

Deal Summary: Rate increases on all CDs and IRA CDs. Most noteworthy include 18-month (1.97% APY) and 7-year (2.48% APY).

Availability: Easy membership requirement

The start of a new month often brings rate changes at credit unions, and that is the case at PenFed Credit Union (PenFed). All of its certificate and IRA certificate rates increased today. Unfortunately, the rates for all of the terms are less than the rates at several internet banks. Hopefully, one of these days, we’ll see the return of some hot CD deals like many...

For those hoping for a repeat of 2013, it’s a disappointment. PenFed Credit Union (PenFed) did have a couple of certificate rate increases for the start of December, but the rate increases are not close to what we saw at PenFed in December 2013. PenFed continues the trend that we have seen all year: short-term and mid-term rates rise as long-term rates stay the same. The only two certificate rate increases today at PenFed...

PenFed Credit Union (PenFed) increased the rates on all of its Money Market Certificates (CDs) today. PenFed typically changes rates at the start of each month, so this increase is a good sign that PenFed saw the need to do another rate hike so soon after its October 1st increase. The new rates aren’t exceptional, but they are competitive. The most competitive ones are the 18-month CD (1.77% APY) and the 12-month...

Many banks and credit unions having been coming out with higher rates today (see Forum). While it is common for credit unions like PenFed Credit Union (PenFed) to change rates on the first of the month, the number of institutions increasing rates seems a little higher than normal. Perhaps the last Fed rate hike is starting to have an effect.

Happy New Years! PenFed Credit Union (PenFed) has started the new year with higher long-term CD rates. PenFed has a history of offering top long-term CD deals in January, and it’s nice to see PenFed continuing this tradition. The new rates aren’t spectacular, but they are very competitive. Below is a summary of the new CD rates and how they have changed from last month.